Foreign investors pulled back sharply from Ghana’s debt market in 2024, cutting their holdings to GH¢13.4 billion by December, compared to GH¢17.5 billion a year earlier, according to the Bank of Ghana’s 2024 Financial Stability Review. The drop represents a significant loss of foreign appetite for government securities, raising fresh questions about investor confidence in Ghana’s fixed-income space.
At the same time, Ghana’s stock market told a different story. Foreign equity holdings jumped to GH¢33.6 billion at the end of 2024, a sharp rise from GH¢20.9 billion the previous year. Analysts say investors were drawn by stronger market performance, corporate profitability, and improved resilience among listed companies.
The contrasting trends highlight the mixed mood among global investors when it comes to Ghana’s economy. On one hand, the sell-off in debt instruments reflects macroeconomic concerns, including high inflation, fiscal pressures, and uncertainties in global financial markets. On the other hand, the stock market gains show rising optimism about Ghana’s long-term growth prospects and the ability of listed firms to weather economic storms.
Debt securities, once considered a relatively safe bet for foreign investors, have come under pressure in many African countries. For Ghana, the decline in foreign holdings is linked to concerns around debt restructuring, government borrowing costs, and inflationary pressures that have weakened investor appetite. Some investors are also shifting their portfolios to other emerging markets offering better yields or more stable environments.
Yet, equity markets appear to be enjoying renewed trust. Ghana’s stock exchange saw reduced losses among companies in 2024, with only 12.9 percent of listed equities reporting negative returns compared to 33.3 percent in 2023. The Bank of Ghana said the stability index improved significantly, climbing to 0.39 in December 2024, up from 0.23 the year before. This shows that listed companies are now performing better, becoming more profitable, and attracting stronger interest from both local and international investors.
The Bank of Ghana is optimistic that the debt market will recover in 2025, riding on expected macroeconomic stability and government reforms. Authorities believe fiscal discipline, improved debt management, and targeted reforms will help restore investor confidence. However, some observers warn that global financial conditions and the pace of Ghana’s economic recovery will ultimately determine how much foreign capital flows back into government securities.
One concern flagged by the central bank is market concentration. Trading activity is still dominated by a few key equities, with the Herfindahl-Hirschman Index (HHI) unchanged at 0.39 by the end of 2024. This level of concentration suggests limited diversification in the market, which may discourage some investors who prefer a broader spread of opportunities. Analysts caution that without deeper market reforms and the listing of more companies, Ghana’s capital market may remain vulnerable to sudden shifts in investor sentiment.
Despite these challenges, the surge in foreign equity participation is a bright spot for the economy. It signals confidence in Ghana’s corporate sector, stronger governance, and potential for long-term growth. With improved financial discipline and stability, the West African nation could continue to attract foreign investors seeking exposure to African growth markets.
Experts say the next phase will depend heavily on how the government and the Bank of Ghana sustain ongoing reforms. Policies that reduce inflation, stabilise the cedi, and improve fiscal management will be key to regaining investor trust in the debt market. At the same time, more incentives for companies to list on the stock exchange could help diversify investment options and deepen the market.
For now, Ghana is experiencing a tale of two markets — a shrinking debt market struggling with macroeconomic realities, and a rising equity market buoyed by investor confidence. The balance of these two forces will shape how much foreign capital the country can attract in the years ahead.
